Interim Statement 9 MAY 2018

Transcription

1 Q1 Interim Statement JANUARY MARCH MAY 2018

2 Contents Summary 3 Business areas 5 If 5 Topdanmark 7 Associated company Nordea Bank AB 9 Mandatum Life 10 Holding 12 Other developments 13 Events after the end of the reporting period 13 Annual General Meeting 13 Personnel 14 Remuneration 14 Shares and share capital 14 Internal dividends 16 Ratings 16 Solvency 16 Debt financing 17 Outlook 19 Outlook for The major risks and uncertainties to the Group in the near-term 19 Tables 21 Group financial review 21 Calculation of key figures 23 Group quarterly comprehensive income statement 25 Statement of profit and other comprehensive income, IFRS 26 Consolidated balance sheet, IFRS 27 Statement of changes in equity, IFRS 28 Statement of cash flows, IFRS 29 Notes 30 Accounting policies 30 Comprehensive income statement by segment for three months ended 31 March Comprehensive income statement by segment for three months ended 31 March Consolidated balance sheet by segment at 31 March Consolidated balance sheet by segment at 31 December Other notes 35 1 Net income from investments 35 2 Financial assets 37 3 Result analysis of If 38 4 Sampo plc s income statement and balance sheet (FAS) 39 5 Associate acquisitions 40 6 Events after the reporting period 40 2

3 9 May 2018 Sampo Group s results for January March 2018 Sampo Group s profit before taxes for January - March 2018 amounted to EUR 445 million (430). The total comprehensive income for the period, taking changes in the market value of assets into account, decreased to EUR 108 million (557). The insurance technical result remained exceptionally strong but the weak investment markets and Swedish krone weighted heavily on the mark-to-market results. Earnings per share amounted to EUR 0.63 (0.68). Mark-to-market earnings per share were EUR 0.15 (0.99). The return on equity (RoE) for the Group was 2.5 per cent (18.4) for January - March Net asset value per share on 31 March 2018 amounted to EUR (25.37). The Annual General Meeting held on 19 April 2018 decided to pay a dividend of EUR 2.60 per share (2.30). The dividend was paid on 3 May Profit before taxes for the segment If amounted to EUR 193 million (180). Combined ratio for January March 2018 was 86.5 per cent (87.4). Return on equity was -0.9 per cent (37.5). Topdanmark segment s profit before taxes amounted to EUR 60 million in Sampo Group s consolidated accounts. This deviates from the pre-tax profit that Topdanmark reported on 23 April 2018, due to alignment of accounting principles. Combined ratio amounted to 83.7 per cent. Sampo s share of Nordea s net profit for the first quarter of 2018 amounted to EUR 165 million (171). Nordea s return on equity was 10.0 per cent (10.3). Core Tier 1 ratio (excluding transition rules) strengthened to 19.8 per cent (19.5). In segment reporting the share of Nordea s profit is included in the segment Holding. Profit before taxes for the segment Mandatum amounted to EUR 73 million (54). Return on equity declined to -5.8 per cent (24.3). Premium income on own account increased to EUR 243 million (229). Key figures EURm 1 3/ /2017 Change, % Profit before taxes If Topdanmark Associate (Nordea) Mandatum Holding (excl. Nordea) Profit for the period Change Earnings per share, EUR EPS (incl. change in FVR) EUR NAV per share, EUR *) Average number of staff (FTE) 9,419 6,844 2,575 Group solvency ratio, % *) RoE, % *) comparison figure from The figures in this report are not audited. Income statement items are compared on a year-on-year basis and comparison figures for balance sheet items are from 31 December 2017 unless otherwise stated. 3

4 Exchange rates used in reporting 1 3/ / / / /2017 EURSEK Income statement (average) Balance sheet (at end of period) DKKSEK Income statement (average) Balance sheet (at end of period) NOKSEK Income statement (average) Balance sheet (at end of period) EURDKK Income statement (average) Balance sheet (at end of period)

5 Business areas Business areas If If P&C is the leading property and casualty insurance company in the Nordic region, with insurance operations that also encompass the Baltic countries. The P&C insurance group s parent company, If P&C Insurance Holding Ltd, is located in Sweden, and the If subsidiaries and branches provide insurance solutions and services in Finland, Sweden, Norway, Denmark and the Baltic countries. If s operations are divided into four business areas: Private, Commercial, Industrial and Baltic. Results EURm 1 3/ /2017 Change, % Premiums, net 1,518 1,543-2 Net income from investments Other operating income Claims incurred Change in insurance liabilities Staff costs Other operating expenses Finance costs Share of associates profit/loss Profit before taxes Key figures Change Combined ratio, % Risk ratio, % Cost ratio, % Expense ratio, % Return on equity, % Average number of staff (FTE) 6,461 6, Profit before taxes for January - March 2018 for the If segment amounted to EUR 193 million (180). The total comprehensive income for the period after tax reflecting the weak development of Swedish krone decreased to EUR -6 million (246). Combined ratio was 86.5 per cent (87.4) and risk ratio 64.7 per cent (65.4). Net releases from technical reserves relating to prior year claims were EUR 50 million (17) in the first quarter of Swedish discount rate used to discount the annuity reserves rose 0.01 percentage point to and had a positive impact of EUR 1 million on the profit. Technical result increased to EUR 143 million (139). Insurance margin (technical result in relation to net premiums earned) amounted to 13.8 per cent (13.2). 5

6 Business areas Combined ratio, % Risk ratio, % 1 3/ /2017 Change 1 3/ /2017 Change Private Commercial Industrial Baltic Sweden Norway Finland Denmark Large claims were EUR 4 million worse than expected in the first quarter of The weather conditions during the first quarter resulted in a more normal winter, which affected the risk ratio negatively compared to last year. In the comparison period, the lowering of the discount rate for annuities in Finland had a negative impact on the Finnish country specific result and on all the business areas excluding Baltic. Gross written premiums decreased to EUR 1,621 million (1,643) in January - March 2018, but adjusted for currency, premium growth was 2.1 per cent. Growth was positive in all business areas and all markets, except in Finland. The customer base continued to increase during the first quarter in all Business Areas. The large corporate segment, Business Area Industrial that renews a significant part of the portfolio in the beginning of the year reported a premium growth adjusted for currency of 2.0 per cent compared to last year. Cost ratio continued to improve and amounted to 21.8 per cent (22.0) and expense ratio to 16.2 per cent (16.3). On 31 March 2018, the total investment assets of If P&C amounted to EUR 11.6 billion (11.5), of which fixed income investments constituted 81 per cent (84), money market 7 per cent (3) and equity 11 per cent (13). Net income from investments amounted to EUR 53 million (52). Investment return marked-to-market for the first quarter of 2018 was -0.1 per cent (1.5). Duration for interest bearing assets was 1.4 years (1.4) and average maturity 2.6 years (2.7). Fixed income running yield without taking into account the FX hedging cost as at 31 March 2018 was 1.5 per cent (1.7). If P&C s solvency position is described in the section Solvency. 6

7 Business areas Liiketoiminta-alueet Topdanmark Topdanmark is the second largest non-life insurance company and the fourth largest life insurance company in Denmark. The company is listed on Nasdaq Copenhagen. In non-life insurance, Topdanmark has a 17 per cent market share. Topdanmark focuses on the private, agricultural and SME market where the company has around 600,000 customers and handles around 300,000 claims a year. In life insurance, Topdanmark has a 9 per cent market share in Denmark. Results EURm 1 3/ /2017 Change, % Premiums, net Net income from investments Other operating income Claims incurred Change in insurance liabilities Staff costs Other operating expenses Finance costs Share of associates profit/loss Profit before taxes Key figures Change Combined ratio, % Risk ratio, % Expense ratio, % Average number of staff (FTE) 2, On 31 March 2018 Sampo plc held 41,997,070 Topdanmark shares, corresponding to 46.7 per cent of all shares and 48.7 per cent of related voting rights in the company. The market value of the holding was EUR 1,604 million at 31 March The AGM on 12 April 2018 decided to pay a dividend of DKK 19 per share. Sampo plc s share of the dividend payment was EUR 107 million. Sampo Group started to consolidate Topdanmark as a subsidiary from 30 September In Sampo Group s segment Topdanmark Sampo plc s share of Topdanmark s purchase price allocated to customer relations is amortized over a period of 10 years leading to a quarterly amortization of around EUR 5 million, net of tax (included in Other operating expenses). Topdanmark reports its stand-alone financials based on the same accounting principles as they have reported in the past. Sampo reports Topdanmark segment in its consolidated accounts based on accounting principles that are adjusted to be in line with accounting policies of Sampo, because Group companies are required to have similar policies. This leads to differences in numbers reported by Topdanmark as a listed company compared to the segment Topdanmark as part of Sampo. 7

8 Business areas The following text is based on Topdanmark s January - March 2018 result release published on 23 April Topdanmark s pre-tax profit for January March 2018 amounted to EUR 60 million. Topdanmark s premiums amounted to EUR 837 million. In non-life insurance premiums earned increased 1.7 per cent and in life insurance gross premiums increased 18.6 per cent. The non-life insurance run-off profits of EUR 8 million were primarily generated in workers compensation, motor and illness/accident insurance. In the first quarter of 2018 there were no weather related claims, similar to the first quarter of Adjusted for run-off, weather related claims and large claims, the claims trend improved by 1.4 percentage points. The combined ratio amounted to 83.7 per cent in the first quarter of The expense ratio was 17.4 per cent. Topdanmark s solvency position is described in the section Solvency. Further information on Topdanmark A/S and its January - March 2018 result is available at 8

9 Business areas Liiketoiminta-alueet Associated company Nordea Bank AB Nordea is the largest bank in the Nordic region and among the ten largest financial groups in Europe in terms of total market capitalization with around 11 million customers. The Nordea share is listed on the Nasdaq exchanges in Stockholm, Helsinki and Copenhagen. In Sampo Group s reporting Nordea is treated as an associated company and is included in the segment Holding. On 31 March 2018 Sampo plc held 860,440,497 Nordea shares corresponding to holding of 21.2 per cent. The average price paid per share amounted to EUR 6.46 and the book value in the Group accounts was EUR 8.24 per share. The closing price as at 31 March 2018 was EUR The following text is based on Nordea s First Quarter Report 2018 published on 25 April After an exceptionally stable situation on the financial markets in 2017, 2018 has started with higher volatility. The synchronized growth in the Nordic markets continued. Geopolitical factors continued to challenge globalization trends, however, Nordea has seen that geopolitical concerns start to create volatility in the market. Additionally, there are early signs that the business cycle is starting to reach a peak level, and just as in 2017, Nordea continues to focus on disciplined lending underwriting principles and is well prepared to handle a situation with lower growth. Total revenues decreased 4 per cent in local currencies compared to the first quarter of 2017 but increased 4 per cent in local currencies compared to last quarter. Net interest income decreased 9 per cent in local currencies compared to the first quarter of 2017 mainly due to de-risking, deconsolidation of the Baltics and lower revenues from Treasury. Fee and commission income was down 9 per cent in local currencies compared to the first quarter of 2017, mainly driven by lower corporate and institutional activities and lower AuM. Net flow was EUR -3.6 billion (1.3). The net result from items at fair value increased 17 per cent in local currencies to EUR 441 million (375) and 90 per cent in local currencies compared to last quarter. Costs decreased by 1 per cent compared to the first quarter of 2017 and total cash spending decreased by 7 per cent. Credit quality continued to improve and our loan losses are at the lowest level since Nordea reiterates its guidance on loan losses, which are expected to be below the long-term average in the coming quarters. Nordea s reported Common Equity Tier 1 (CET1) ratio increased to 19.8 per cent (18.8), and the management buffer has again reached an all-time-high level of 230 bps, well above target level of bps. Further information on Nordea Bank AB and its January - March 2018 result is available at 9

10 Business areas Liiketoiminta-alueet Mandatum Life Mandatum Life Group comprises Mandatum Life Insurance Company Ltd., a wholly-owned subsidiary of Sampo plc, operating in Finland, Estonia, Latvia and Lithuania, and its three subsidiaries. Parent company, Mandatum Life, is responsible for sales functions and all the functions required by the Insurance Companies Act. The subsidiaries are Mandatum Life Services Ltd, Mandatum Life Investment Services Ltd. and Mandatum Life Fund Management S.A. Results EURm 1 3/ /2017 Change, % Premiums written Net income from investments Other operating income Claims incurred Change in liabilities for inv. and ins. contracts Staff costs Other operating expenses Finance costs Profit before taxes Key figures Change Expense ratio, % Return on equity, % Average number of staff (FTE) Mandatum segment s profit before taxes for January - March 2018 amounted to EUR 73 million (54). The total comprehensive income for the period after tax reflecting the changes in market values of assets declined to EUR -19 million (85). Return on equity was -5.8 per cent (24.3). Net investment income, excluding income on unit-linked contracts, amounted to EUR 72 million (97). Net income from unit-linked contracts was EUR -90 million (213). In the first quarter of 2018 fair value reserve decreased to EUR 521 million (599). Mandatum Life Group s total technical reserves amounted to EUR 11.4 billion (11.6). Unit-linked reserves declined to EUR 6.9 billion (7.1) at the end of the first quarter of 2018, because of lower market value of assets covering the reserves. The amount corresponds to 61 percent (58) of total technical reserves. At the end of the first quarter of 2018 with profit reserves amounted to EUR 4.5 billion (4.8). Reserves related to the higher guarantees of 4.5 and 3.5 per cent decreased by EUR 64 million to EUR 2.6 billion in January - March Mandatum Life has all in all supplemented its technical reserves with a total of EUR 301 million (325) due to low level of interest rates. The figure does not take into account the reserves relating to the segregated fund. The discount rate used for the rest of 2018, 2019 and 2020 is 0.25 per cent. For 2021 the rate is 2.75 per cent. Discount rate applied for the segregated fund is 0.50 per cent. In the first quarter of 2018 no reserve strengthening was made. 10

11 Business areas On 31 March 2018 Mandatum Life Group s investment assets, excluding the assets of EUR 6.9 billion (7.2) covering unit-linked liabilities, amounted to EUR 6.0 billion (6.6) at market values. The assets covering Mandatum Life s original with profit liabilities on 31 March 2018 amounted to EUR 4.9 billion (5.2) at market values. 43 per cent (42) of the assets are in fixed income instruments, 14 per cent (16) in money market, 29 per cent (28) in equities and 14 per cent (15) in alternative investments. The investment return marked-to-market for January - March 2018 was -0.7 per cent (2.6). The duration of fixed income assets at the end of March 2018 was 2.2 years (2.0) and average maturity 2.4 years (2.2). Fixed income running yield without taking into account the FX hedging cost was 2.6 per cent (3.3). The assets covering the segregated fund amounted to EUR 1.1 billion (1.1), of which 76 per cent (77) was in fixed income, 5 per cent (6) in money market, 12 per cent (11) in equities and 7 per cent (6) in alternative investments. Segregated fund s investment return marked-to-market for January - March 2018 was -0.7 per cent (0.9). At the end of March 2018 the duration of fixed income assets was 2.6 years (2.6) and average maturity 3.3 years (3.3). Fixed income (incl. money market) running yield without taking into account the FX hedging cost was 2.2 per cent (2.1). Mandatum Life s solvency position is described in the section Solvency. The expense result for life insurance segment in the first quarter amounted to EUR 7 million (8). Risk result amounted to EUR 5 million (8). Mandatum Life Group s premium income on own account grew to EUR 243 million (229) in the first quarter of

12 Business areas Liiketoiminta-alueet Holding Sampo plc owns and controls its subsidiaries engaged in P&C and life insurance. In addition Sampo plc held on 31 March 2018 approximately 21.2 per cent of the share capital of Nordea, the largest bank in the Nordic countries. Nordea is an associated company to Sampo plc. Results EURm 1 3/ /2017 Change, % Net investment income Other operating income Staff costs Other operating expenses Finance costs Share of associates profit Profit before taxes Key figures Change Average number of staff (FTE) Holding segment s profit before taxes for January - March 2018 decreased to EUR 119 million (174), of which EUR 165 million (171) relates to Sampo s share of Nordea s first quarter 2018 profit. Segment s profit excluding Nordea was EUR -46 million (3). The result is burdened by currency losses mainly from Swedish krone to the amount of EUR -59 million influencing both investment income and finance costs. On 8 February 2018 Nordic Capital Fund VIII ( Nordic Capital ) and Sampo, through NDX Intressenter AB ( NDX Intressenter ), announced a recommended mandatory public cash offer to the shareholders in Nordax Group AB (publ) ( Nordax ) to acquire all outstanding shares in Nordax. At the end of the acceptance period on 21 March 2018, the Offer had been accepted by shareholders representing a total of 23,044,054 shares in Nordax, corresponding to per cent of all shares and votes in the company. Sampo s ownership rose above 20 per cent and Nordax became an associated company to Sampo plc. The acceptance period was extended to 5 April 2018 in order to give remaining shareholders an additional possibility to accept the Offer. At the end of the extended acceptance period NDX Intressenter controlled a total of 109,816,242 shares, corresponding to per cent of all shares and votes in Nordax. As previously communicated, Nordic Capital and Sampo hold and per cent, respectively, of the shares and votes in NDX Intressenter following the completion of the Offer. Sampo plc started to consolidate Nordax as an associated company in March Sampo plc s holding in Nordea Bank was booked in the consolidated balance sheet at EUR 7.1 billion. The market value of the holding was EUR 7.5 billion, i.e. EUR 8.66 per share, at 31 March In addition, the assets on Sampo plc s balance sheet included holdings in subsidiaries for EUR 3.4 billion (3.4). 12

13 Other developments Other developments Events after the end of the reporting period Mandatum Life disclosed on 27 October 2016 that it would use its right to sell the insurance portfolio distributed by Danske Bank s Finnish branch network to Danske Bank or a third party appointed by Danske Bank. As a result of the valuation process, conducted by external valuators, the value of the insurance portfolio as at the 31 December 2016 was determined to be EUR 334 million. After the correction for the theoretical result since 2017, Mandatum Life would have received EUR 297 million at the end of Mandatum Life and Danske Bank agreed on 24 April 2018 to continue their co-operation and that the transfer of the insurance portfolio agreed earlier will not take place. The agreed transaction is subject to confirmation of the tax treatment. On closing of the transaction, Mandatum Life will receive a transaction price of EUR 197 million from Danske Bank for the above arrangement. The amount is subject to corporate tax. The transaction is expected to close within 3 months. Annual General Meeting The Annual General Meeting of Sampo plc, held on 19 April 2018, decided to distribute a dividend of EUR 2.60 per share for The dividend was paid on 3 May The Annual General Meeting adopted the financial accounts for 2017 and discharged the Board of Directors and the Group CEO and President from liability for the financial year. The Annual General Meeting elected eight members to the Board of Directors. The following members were re-elected to the Board: Christian Clausen, Jannica Fagerholm, Adine Grate Axén, Veli-Matti Mattila, Risto Murto, Eira Palin-Lehtinen and Björn Wahlroos. Per Arthur Sørlie was not available for re-election. Antti Mäkinen was elected as a new member to the Board. The Members of the Board were elected for a term continuing until the close of the next Annual General Meeting. At its organizational meeting, the Board elected Björn Wahlroos as Chairman and Eira Palin-Lehtinen as Vice Chairperson. Veli-Matti Mattila, Risto Murto, Eira Palin-Lehtinen and Björn Wahlroos (Chairman) were elected to the Nomination and Compensation Committee and Christian Clausen, Jannica Fagerholm (Chairperson), Adine Grate Axén and Antti Mäkinen to the Audit Committee. All the Board members have been determined to be independent of the company under the rules of the Finnish Corporate Governance Code Furthermore, all Board members but Antti Mäkinen have been determined to be independent of the major shareholders. The Annual General Meeting decided to pay the following fees to the members of the Board of Directors until the close of the 2019 Annual General Meeting: the Chairman of the Board will be paid an annual fee of EUR 175,000, the Vice Chairperson of the Board and the Chairperson of the Audit Committee will be paid EUR 115,000, the members of the Audit Committee will be paid EUR 96,000 and the other members of the Board of Directors will be paid EUR 90,000 each. A Board member shall in accordance with the resolution of the Annual General Meeting acquire Sampo plc s A shares at the price paid in public trading for 50 per cent of his/her annual fee excluding taxes and similar payments. Ernst & Young Oy was elected as Auditor. The Auditor will be paid a fee determined by an invoice approved by Sampo. Kristina Sandin, APA, will act as the principally responsible auditor. 13

14 Other developments Based on the proposal made by the Board of Directors, the Annual General Meeting decided to amend Sections 9 and 12 of the Articles of Association. There were 3,371 shareholders represented at the beginning of the meeting holding altogether 362,200,385 shares and 367,000,385 votes in the company. The minutes of the Annual General Meeting are available for viewing at and at Sampo plc s head office at Fabianinkatu 27, Helsinki, Finland. Personnel The average number of Sampo Group s employees during January March 2018 was 9,419. A year earlier the corresponding figure was 6,844. The number of full-time equivalent staff in Sampo Group on 31 March 2018 was 9,459 (6,883) employees. During the first quarter of 2018, approximately 69 per cent of the personnel worked in If, 25 per cent in Topdanmark, 6 per cent in Mandatum Life and 1 per cent in the parent company Sampo plc. In geographical terms Denmark had 31 per cent of the personnel, Finland had 24 per cent, Sweden 21 per cent and Norway 14 per cent. The share of other countries was 10 per cent. As of 31 March 2018 If employed 6,522 persons, Topdanmark 2,347 and Mandatum Life 532. Sampo plc had 58 employees at the end of the first quarter. Remuneration In the first quarter of 2018 no long-term incentive payments were made. At the end of March 2018 Sampo Group had provisioned EUR 33 million (30) for future payments of long-term incentive schemes. EUR 5 million (5), including social costs, was paid as short-term incentives during the same period. The long-term incentive schemes in force had a negative profit impact of EUR 2 million (-6). The terms of the long-term incentive schemes are available at Sampo Group published in March 2018 a Remuneration Report 2017 at The Remuneration Report 2017 is part of the Remuneration Statement, which is available at The statement has been prepared in accordance with the Corporate Governance Code issued by the Securities Market Association and effective as of 1 January Shares and share capital As at 31 March 2018, Sampo plc had 555,351,850 shares, which were divided into 554,151,850 A shares and 1,200,000 B shares. Total number of votes attached to the shares is 560,151,850. Each A share entitles the holder to one vote and each B share entitles the holder to five votes at the General Meeting of Shareholders. The Annual General Meeting authorized the Board to repurchase a maximum of 50,000,000 Sampo A shares. The price paid for the shares repurchased under the authorization shall be based on the current 14

15 Other developments market price of Sampo A shares on the securities market. The authorization will be valid until the close of the next Annual General Meeting, nevertheless not more than 18 months after AGM s decision. Sampo plc did not repurchase its own shares during the first quarter of 2018 and at the end of March 2018, neither Sampo plc nor its Group companies held any Sampo A shares. During the first quarter of 2018 Sampo plc received altogether 25 notifications of change in holding pursuant to Chapter 9, Section 5 of the Securities Markets Act. The notified changes are illustrated in the table below. Date of change Company Shares, total Voting rights, total 2 Jan 2018 BlackRock, Inc. 5.07% 5.03% 5 Jan 2018 BlackRock, Inc. 5.01% Below 5% 5 Jan 2018 Capital Income Builder (CIB) 5.07% 5.02% 8 Jan 2018 BlackRock, Inc 5.04% 5.00% 9 Jan 2018 BlackRock, Inc Below 5% Below 5% 10 Jan 2018 BlackRock, Inc 5.04% Below 5% 17 Jan 2018 BlackRock, Inc Below 5% Below 5% 18 Jan 2018 BlackRock, Inc 5.03% Below 5% 19 Jan 2018 BlackRock, Inc 5.06% 5.01% 22 Jan 2018 BlackRock, Inc 5.02% Below 5% 23 Jan 2018 BlackRock, Inc 5.01% Below 5% 25 Jan 2018 BlackRock, Inc Below 5% Below 5% 2 Feb 2018 BlackRock, Inc 5.06% 5.02% 5 Feb 2018 BlackRock, Inc 5.09% 5.05% 6 Feb 2018 BlackRock, Inc 5.02% Below 5% 12 Feb 2018 BlackRock, Inc 5.12% 5.08% 13 Feb 2018 BlackRock, Inc 5.03% Below 5% 14 Feb 2018 BlackRock, Inc Below 5% Below 5% 21 Feb 2018 BlackRock, Inc 5.004% Below 5% 23 Feb 2018 BlackRock, Inc 5.14% 5.10% 27 Feb 2018 BlackRock, Inc 5.03% Below 5% 2 Mar 2018 BlackRock, Inc Below 5% Below 5% 9 Mar 2018 BlackRock, Inc 5.01% Below 5% 12 Mar 2018 BlackRock, Inc 5.05% 5.00% 13 Mar 2018 BlackRock, Inc 5.53% 5.48% In addition Sampo plc received 2 notifications from BlackRock after the end of the reporting period. The details of the notifications are available at 15

16 Other developments Internal dividends Mandatum Life paid a dividend of EUR 150 million to Sampo plc in March On 15 March 2018 Nordea Bank AB s Annual General Meeting decided on a dividend of EUR 0.68 per share. Sampo plc s share of total dividends amounts to EUR 585 million. The dividend was paid on 26 March Topdanmark s Annual General Meeting held on 12 April 2018 decided to pay a dividend of DKK 19 per share. Sampo plc s share of the dividend payment was EUR 107 million. The dividend was paid on 17 April If P&C normally pays its dividend towards the end of the calendar year. Ratings All the ratings for Sampo Group companies remained unchanged in the first quarter of Rated company Moody s Standard & Poor s Rating Outlook Rating Outlook Sampo plc Baa1 Stable A- Stable If P&C Insurance Ltd (Sweden) A1 Stable A+ Stable Solvency The starting point for the calculation of Group s own funds is Group s consolidated equity. Sectoral items, which include among others the subordinated liabilities held by the external investors, are added to the Group s consolidated equity. In addition, intangible assets and foreseeable dividends as well as other deductible items are subtracted from the Group s own funds. Sampo Group solvency EURm 31 March Dec 2017 Group capital 13,571 13,508 Goodwill, other intangibles, foreseeable dividends and distributions and deductibles -5,326-5,004 Sectoral items 2,597 2,517 Group's own funds, total 10,842 11,021 Minimum requirements for own funds, total 7,443 7,164 Group solvency 3,398 3,858 Group solvency ratio (Own funds % of minimum requirements) Group s conglomerate solvency ratio (own funds in relation to minimum requirements for own funds) amounted to 146 per cent (154) as at 31 March The decrease was due to an increase in Nordea s capital requirement with effect from 1 January 2018 because of the expiration of the Basel I floor in Sweden. Until 31 December 2017 Sampo s share of Nordea s capital requirement was based on the minimum 16

17 Other developments requirement including Basel I floor but as of 1 January 2018 Sampo started to use Minimum requirement for Own funds (as defined in Nordea s quarterly Factbook) as the capital requirement in Sampo Group s solvency. In addition, the dividend deduction increased as the dividends paid on 3 May 2018 and a quarter of the planned dividends for 2018 were both deducted from own funds. If, Topdanmark and Mandatum Life apply Solvency II rules in their regulatory solvency calculations. If Group companies use either partial internal models or standard model for calculation of their solo solvency position. Mandatum Life reports in accordance with standard formula for Solvency II. Topdanmark uses an internal model to report its stand-alone solvency position. In Sampo Group s conglomerate solvency calculation a standard model is, however, used for all insurance entities. If P&C s application to extend the partial internal model to include the Finnish branch for If P&C Insurance Ltd (Sweden) for calculating solvency requirement was approved on 19 February 2018 by the Swedish Financial Supervisory Authority. The implementation of the revised model resulted in a positive net effect on If P&C Insurance Ltd (Sweden) capital position on comparable basis of approximately EUR 150 million. If P&C Group has an A+ rating from S&P which requires significantly more capital than Solvency II standard formula. On 31 March 2018 If P&C Group s Solvency II capital requirement under standard formula amounted to EUR 1,895 million (1,938) and own funds to EUR 4,063 million (3,818). Solvency ratio was 214 per cent (197). S&P A+ rating capital charge for If P&C Group amounted to EUR 3,046 million (3,098) on 31 March 2018 and the capital base was EUR 3,524 million (3,408). Topdanmark uses a partial internal model to calculate the non-life insurance risk. This model, approved by the DFSA, provides the basis for including non-life insurance risks in Topdanmark s solvency calculations. Topdanmark s solvency ratio under the partial internal model was 204 per cent at the end of March On 31 March 2018 Topdanmark s Solvency II capital requirement under standard formula amounted to EUR 536 million and own funds to EUR 900 million. Solvency ratio amounted to 168 per cent. Mandatum Life s solvency ratio after transitional measures on 31 March 2018 remained strong at 186 per cent (182). Own funds of EUR 1,947 million (1,977) exceed Solvency Capital Requirement (SCR) of EUR 1,047 million (1,087) with a billion euros. Without transitional measures, own funds would have amounted to EUR 1,533 million (1,555) and the solvency capital requirement to EUR 1,139 million (1,220) leading to a solvency ratio of 135 per cent (127). Debt financing Sampo plc s debt financing on 31 March 2018 amounted to EUR 3,591 million (3,177) and interest bearing assets to EUR 2,428 million (1,754). Interest bearing assets include bank accounts, fixed income instruments and EUR 485 million (496) of hybrid capital and subordinated debt instruments issued by the subsidiaries and associated companies. Altogether, excluding cash and equivalents, the fixed income instruments yield over 5 per cent. At the end of the first quarter of 2018 the interest bearing net debt amounted to EUR 1,163 million (1,423). The net debt calculation takes into account interest bearing assets and liabilities. Gross debt to Sampo plc s equity was 43 per cent (41) and financial leverage 30 per cent (29). 17

18 Other developments On 21 February 2018 Sampo plc issued under its EMTN Programme senior unsecured fixed rate notes of EUR 500 million maturing on 21 February On 22 March 2018 If P&C Insurance Holding Ltd. (Sweden) issued perpetual floating rate callable restricted Tier1 notes of SEK 1,000 million callable on 22 March The interest paid is STIBOR 3M per cent amounting at the end of March 2018 to per cent. On 31 March 2018 financial liabilities in Sampo plc s balance sheet consisted of issued senior bonds and notes of EUR 3,359 million (2,884) and EUR 232 million (293) of CPs issued. The average interest, net of interest rate swaps, on Sampo plc s debt as of 31 March 2018 was 0.85 per cent (0.96). More information on Sampo Group s outstanding debt issues is available at 18

19 Outlook Outlook Outlook for 2018 Sampo Group s business areas are expected to report good operating results for However, the mark-to-market results are, particularly in life insurance, highly dependent on capital market developments. The continuing low interest rate level also creates a challenging environment for reinvestment in fixed income instruments. If P&C is expected to reach a combined ratio target of per cent for the full-year With regard to Topdanmark, reference is made to the profit forecast model that the company publishes quarterly. Nordea s contribution to the Group s profit is expected to be significant. The major risks and uncertainties to the Group in the near-term In its current day-to-day business activities Sampo Group is exposed to various risks and uncertainties mainly through its separately managed major business units. Parent Company Sampo s contribution to risks is minor one. Major risks affecting the Group companies profitability and its variation are market, credit, insurance and operational risks that are quantified independently by the major business units. At the group level sources of risks are same, but they are not directly additive because of diversification effects. Uncertainties in the form of major unforeseen events may have an immediate impact on the Group s profitability. Identification of unforeseen events is easier than estimation of their probabilities, timing and potential outcomes. Currently there are a number of widely identified macro-economic, political and other sources of uncertainty which can in various ways affect financial services industry negatively. Especially the political risks are at the elevated level at the moment. Other sources of uncertainty are unforeseen structural changes in the business environment and already identified trends affecting business environment. These external drivers may have long-term impact on how business shall be conducted. Examples of already identified trends are technological development in general, digitalization and sustainability issues that may have profound effects on financial sector companies as well. SAMPO PLC Board of Directors 19

20 Information For more information, please contact Peter Johansson, Group CFO, tel Jarmo Salonen, Head of Investor Relations and Group Communications, tel Mirko Hurmerinta, IR and Communications Specialist, Media Relations, tel Conference call An English-language conference call for investors and analysts will be arranged at 4 pm Finnish time (2 pm UK time). Please call tel. +44 (0) , +46 (0) , or +358 (0) The conference code is The conference call can also be followed live at A recorded version will later be available at the same address. In addition, the Supplementary Financial Information Package is available at Sampo will publish the Half-Year Financial Report for January June 2018 on 8 August Distribution: Nasdaq Helsinki London Stock Exchange The principal media Financial Supervisory Authority 20

21 Group financial review > Financial highlights GROUP 1 3/ /2017 Profit before taxes EURm Return on equity (at fair value) % Return on assets (at fair value) % Equity/assets ratio % Group solvency ¹) EURm 3,398 4,166 Group solvency ratio % Average number of staff 9,419 6,844 IF Premiums written before reinsurers' share EURm 1,621 1,643 Premiums earned EURm 1,052 1,069 Profit before taxes EURm Return on equity (at current value) % Risk ratio ²) % Cost ratio ²) % Loss ratio ²) % Expense ratio ²) % Combined ratio ²) % Average number of staff 6,461 6,255 TOPDANMARK Premiums written before reinsurers' share, life insurance EURm Premiums earned, life insurance EURm Premiums written before reinsurers' share, P&C insurance EURm Premiums earned, P&C insurance EURm Profit before taxes EURm 60 - Loss ratio ²) % Expense ratio ²) % Combined ratio % Average number of staff 2,369 - MANDATUM Premiums written before reinsurers' share EURm Profit before taxes EURm Return on equity (at current value) % Expense ratio % Average number of staff

22 > Group financial review HOLDING 1 3/ /2017 Profit before taxes EURm Average number of staff PER SHARE KEY FIGURES Earnings per share EUR Earnings per share, incl. other comprehensive income EUR Capital and reserves per share EUR Net asset value per share EUR Adjusted share price, high EUR Adjusted share price, low EUR Market capitalisation EURm 25,135 24,898 ¹) The Group solvency is calculated according to the consolidation method defined in Chapter 3 of the Act on the Supervision of Financial and Insurance Conglomerates (2004/699). ²) The key figures for P&C Insurance are based on activity based costs and cannot, therefore, be calculated directly from the consolidated income statement. The result analysis of If is presented in note 3. The number of shares used at the balance sheet date and as the average number during the financial period was 555,351,850. The valuation differences on investment property have been taken into account in calculating the return on assets, return on equity, equity/assets ratio and net asset value per share. The tax component includes the tax corresponding to the result for the period, and the deferred tax liability related to valuation differences on investment property. The total comprehensive income has been used in the calculation of the return on assets and return on equity. The key figures for the insurance business have been calculated in accordance with the decree issued by the Ministry of Finance and the specifying regulations and instructions of the Finance Supervisory Authority. 22

23 Calculation of key figures Return on equity (fair values), % + total comprehensive income valuation differences on investments less deferred tax + total equity valuation differences on investments less deferred tax (average of values 1 Jan. and the end of reporting period) x 100 % Return on assets (at fair values), % + operating profit other comprehensive income before taxes + interest and other financial expense + calculated interest on technical provisions change in valuation differences on investments + balance sheet, total technical provisions relating to unit-linked insurance valuation differences on investments (average of values on 1 Jan. and the end of the reporting period) x 100 % Equity/assets ratio (at fair values), % + total equity valuation differences on investments after deduction of deferred tax + balance sheet total valuation differences on investments x 100 % Risk ratio for P&C insurance, % + claims incurred claims settlement expenses insurance premiums earned x 100 % Cost ratio for P&C insurance, % + operating expenses + claims settlement expenses insurance premiums earned x 100 % Loss ratio for P&C insurance, % claims incurred insurance premiums earned x 100 % Expense ratio for P&C insurance, % operating expenses insurance premiums earned x 100 % Combined ratio for P&C insurance, % Loss ratio + expense ratio Expense ratio for life insurance, % + operating expenses before change in deferred acquisition costs + claims settlement expenses expense charges x 100 % 23

24 Per share key figures Earnings per share profit for the financial period attributable to the parent company s equity holders adjusted average number of shares Equity per share equity attributable to the parent company s equity holders adjusted number of shares at the balance sheet date Net asset value per share + equity attributable to the parent company s equity holders valuation differences on listed associates in the Group valuation differences after the deduction of deferred taxes adjusted number of shares at balance sheet date Market capitalisation number of shares at the balance sheet date x closing share price at the balance sheet date 24

25 Group quarterly comprehensive income statement EURm 1 3/ / / / /2017 Insurance premiums written 2,598 1,722 1,088 1,234 1,771 Net income from investments Other operating income Claims incurred -1,316-1, ,028 Change in liabilities for insurance and investment contracts Staff costs Other operating expenses Finance costs Share of associates' profit/loss Gain from fair valuation of former associated company Profit for the period before taxes , Taxes Profit for the period , Other comprehensive income for the period Items reclassifiable to profit or loss Exchange differences on translating foreign operations Available-for-sale financial assets Share of other comprehensive income of associates Taxes Total items reclassifiable to profit or loss, net of tax Items not reclassifiable to profit or loss Actuarial gains and losses from defined pension plans Taxes Total items not reclassifiable to profit or loss, net of tax TOTAL COMPREHENSIVE INCOME FOR THE PERIOD , Profit attributable to Owners of the parent , Non-controlling interests Total comprehensive income attributable to Owners of the parent , Non-controlling interests

26 Statement of profit and other comprehensive income, IFRS EURm Note 1 3/ /2017 Insurance premiums written 2,598 1,771 Net income from investments Other operating income 8 9 Claims incurred -1,316-1,028 Change in liabilities for insurance and investment contracts Staff costs Other operating expenses Finance costs Share of associates' profit/loss Profit before taxes Taxes Profit for the period Other comprehensive income for the period Items reclassifiable to profit or loss Exchange differences Available-for-sale financial assets Share of other comprehensive income of associates Taxes Total items reclassifiable to profit or loss, net of tax Items not reclassifiable to profit or loss Actuarial gains and losses from defined pension plans 2 5 Taxes 0-1 Total items not reclassifiable to profit or loss, net of tax 1 4 TOTAL COMPREHENSIVE INCOME FOR THE PERIOD Profit attributable to Owners of the parent Non-controlling interests 27 - Total comprehensive income attributable to Owners of the parent Non-controlling interests 27 - Basic earnings per share (EUR)

27 Consolidated balance sheet, IFRS EURm Note 3/ /2017 Assets Property, plant and equipment Investment property Intangible assets 2,091 2,121 Investments in associates 7,514 7,765 Financial assets 2 22,570 22,832 Investments related to unit-linked insurance contracts 7,600 7,409 Tax assets Reinsurers' share of insurance liabilities Other assets 2,471 1,940 Cash and cash equivalents 3,870 2,734 Assets held for sale 3,269 3,374 Total assets 50,611 49,300 Liabilities Liabilities for insurance and investment contracts 19,454 18,900 Liabilities for unit-linked insurance and investment contracts 8,038 7,959 Financial liabilities 4,238 3,649 Tax liabilities Provisions Employee benefits Other liabilities 1,445 1,258 Liabilities related to assets held for sale 3,194 3,299 Total liabilities 37,040 35,792 Equity Share capital Reserves 1,530 1,530 Retained earnings 10,992 10,692 Other components of equity Equity attributable to parent company's equity holders 12,885 12,848 Non-controlling interests Total equity 13,571 13,508 Total equity and liabilities 50,611 49,300 27

28 Statement of changes in equity, IFRS EURm Share capital Legal reserve Invested unrestricted equity Retained earnings 1) Translation of foreign operations 2) Availablefor-sale financial assets 3) Total Noncontrolling interest Total Equity at 1 Jan ,527 9, ,124 11,934-11,934 Changes in equity Share of associate s other changes in equity Profit for the period Other comprehensive income for the period Equity at 31 March ,527 10, ,274 12,522-12,522 Equity at 1 Jan ,527 10, ,184 12, ,508 Changes in equity Share of associate s other changes in equity Share-based payments Profit for the period Other comprehensive income for the period Equity at 31 March ,527 10, ,087 12, ,571 1) IAS 19 Pension benefits had a net effect of EURm -5 (-52) on retained earnings. 2) The total comprehensive income includes also the share of the associate Nordea s other comprehensive income, in accordance with the Group s share holding. The retained earnings thus include EURm -6 (3) of Nordea s actuarial gains/losses from defined pension plans. The exchange differences include the share of Nordea s exchange differences EURm -15 (19). Respectively, available-for-sale financial assets include EURm 1 (4) of Nordea s valuation differences on assets at fair value through p/l. Nordea adopted the new IFRS 9 Financial instruments standard from 1 January 2018 on. 3) The amount recognised in equity from available-for-sale financial assets for the period totalled EURm -103 (189). The amount transferred to p/l amounted to EURm -72 (-41). EURm 6 (-2) was transferred to the Segregated Suomi portfolio. The amount included in the translation, available-for-sale, cash flow hedge reserves and defined benefit plans represent other comprehensive income for each component, net of tax. 28

29 Statement of cash flows, IFRS EURm 1 3/ /2017 Cash and cash equivalent at the beginning of the period 2,734 2,585 Cash flow from/used in operating activities Cash flow from/used in investing activities Cash flow from/used in financing activities Increase of liabilities Decrease of liabilities Cash and cash equivalent at the end of the period 3,870 2,323 The cash flow statement reports cash flows during the period classified by operating, investing and financing activities. Cash flows from operating activities derive primarily from the principal revenue-producing activities. Cash flows from investments in subsidiaries and associated undertakings and those from investments in intangible assets and property, plant and equipment are presented ininvesting activities. Financing activities include cash flows resulting from changes in equity and borrowingsin order to conduct the business. Cash and cash equivalents consist of cash at bank and in hand and short-term deposits (under 3 months). 29